Robust Inference in Risk Elicitation Tasks
Hakan Holm (),
Jean-Robert Tyran () and
Erik Wengström ()
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Ola Andersson: Uppsala University and IFN
No 18-09, Discussion Papers from University of Copenhagen. Department of Economics
Recent experimental evidence suggests that noisy behavior correlates strongly with cognitive ability. This puts previous studies that found a negative relation between cognitive ability and risk aversion into perspective and in particular raises the question of how to achieve robust inference in this domain. This paper shows that using structural estimation that models heterogeneity of noise in combination with a balanced design allows us to mitigate the bias problem. Our estimations show that cognitive ability is related to noisy behavior rather than risk preferences. We also find age and education to be strongly related to noise, but the personality characteristics obtained using the Big Five inventory, are less related to noise and more robustly correlated to risk preferences.
Keywords: Risk preference; cognitive ability; experiment; noise (search for similar items in EconPapers)
JEL-codes: C81 C91 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-neu and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:1809
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